Neither this announcement nor any part of it constitutes an offer to sell or issue or the solicitation of an offer to buy, subscribe or acquire any securities of the Company or Frontera Cayman in any jurisdiction in which any such offer or solicitation would be unlawful and the information contained herein is not for publication or distribution, directly or indirectly, in or into the United States of America, Canada, Japan, Australia, The Republic of South Africa or any jurisdiction in which such publication or distribution would be unlawful.
FRONTERA RESOURCES CORPORATION
Houston, Texas, U.S.A. – 28 June 2011
PROPOSED EQUITY FUNDRAISING, SEDA FACILITY,
DEBT RESTRUCTURING AND
REDOMICILE TO THE CAYMAN ISLANDS
Equity Fundraising – Conditional fundraising of approximately £6.8 million (US$11.0 million), before expenses, by means of a placing of new equity with certain institutional and other investors, as well as through a subscription by a Director and a senior executive, at a price of 4 pence per share.
SEDA – Execution of a standby equity distribution agreement providing for up to approximately £21.5 million (US$35 million) of additional equity investment over a three-year period, subject to the satisfaction of certain conditions.
Work Program – Net proceeds of £5.2 million (US$8.5million) to fund next phase of investment in work programs designed to increase oil and gas production and associated reserve bookings in Block 12 and to settle cash consideration to certain shareholders, as applicable.
Loan Note Conversion – Exchange offer for conversion and/or extension of outstanding 10% convertible loan notes due 2012 and 2013. Expected exchange of at least US$91.1 million principal amount of existing loan notes for new equity, representing approximately 75.4% of the total amount of loan notes outstanding, at the equity fundraising price.
Management Debt Conversion – Conversion of approximately US$8.4 million in loans by a Director and a senior executive, representing 100% of the total amount including accrued interest, at the equity fundraising price.
Redomicile – Redomicile from Delaware, USA, to the Cayman Islands by way of a merger into a newly incorporated Cayman Islands holding company.
The completion of the matters outlined above is subject to a number of conditions. Details of the matters and their conditions are set out here.
Steve C. Nicandros, Chairman and Chief Executive Officer, commented:
“The addition of significant new capital resources and the simultaneous restructuring of the Company’s outstanding debt represents an important milestone in Frontera’s growth plans. This transaction will simplify and strengthen our balance sheet and will greatly enhance Frontera’s operating and financial flexibility. As a result, we will be well positioned to realise value from significantly advancing the next phase of continued investment in our work programs that are aimed at increasing oil and gas production and associated reserve bookings.”
Frontera Resources Corporation
Vice President, Investor Relations and Corporate Communications
Strand Hanson Limited
James Harris / Andrew Emmott / Paul Cocker / Liam Buswell
+44 (0)20 7409 3494
Arbuthnot Securities Limited
Richard Johnson / Adam Lloyd
+44 (0)20 7012 2000
Old Park Lane Capital Plc
Michael Parnes / Luca Tenuta
+44 (0)20 7493 8188
Tim Thompson / Ben Romney
+44 (0)20 7466 5000